Cost per health enrollee in Arkansas Works up 14%

Posted: February 9, 2018 at 4:30 a.m.
Updated: February 9, 2018 at 3:34 p.m.

The average cost per person of subsidized private health insurance under Arkansas Works increased more than 14 percent in January, in part because of premium increases that took effect Jan. 1, according to figures provided by the state Department of Human Services.

Under Arkansas Works, the state uses federal and state funds to buy coverage on the state's health insurance exchange for many people who qualify for Medicaid under the program expansion that took effect in 2014.

Arkansas Works covered more than 285,000 people as of Jan. 1, including some who were assigned to traditional, fee-for-service Medicaid because they were considered "medically frail," with health needs that private plans don't typically cover.

In January, the state made payments to insurance companies totaling more than $137 million on behalf of 237,071 enrollees, an average of $578.27 per enrollee.

That was an increase of 14.4 percent from the average $505.30 paid per enrollee in December.

Including payments for benefits, such as nonemergency medical transportation, that the private plans don't cover, the average per-enrollee cost increased 14.3 percent, to $582.19.

The cost of the program will determine whether Arkansas will owe money to the federal government under the terms of the waiver that authorized Arkansas Works.

The waiver's terms limit the cost from 2017-2021 on the basis monthly per-enrollee caps, which increase every year by 4.7 percent.

Last year, when the cap was $570.50, a Human Services Department report indicates the program's cost averaged $522.84 per enrollee per month.

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The monthly cap per enrollee this year is $597.32.

If the total cost over five years exceeds the limit calculated using the caps, the state will owe the difference to the federal government.

That's on top of the state's regular share of the cost. Last year, the state was responsible for 5 percent, or about $82 million out of a total of about $1.6 billion.

The state's share rose this year to 6 percent. It will continue rising each year until it reaches 10 percent in 2020.

"We're aware of the budget caps, and so are the carriers, and we're going to work with them to make sure we stay below those caps," J.R. Davis, a spokesman for Gov. Asa Hutchinson, said.

Arkansas Blue Cross and Blue Shield spokesman Max Greenwood, whose company's plans cover many of the Arkansas Works enrolleees, said in an email Thursday that this year's premium increase "isn't going to be anything to jeopardize the cap" on costs under the waiver.

It's "way too early for any meaningful discussion" on how premiums will increase next year, she said.

The cost in January included an average monthly premium of $476.10, an increase of almost 30 percent compared with the average premium in December.

That increase reflected insurance companies' response to a decision by President Donald Trump to end a type of subsidy, known as cost-sharing reduction payments, that had compensated insurers for providing enhanced benefits to low-income consumers who don't qualify for Medicaid.

That decision didn't affect Arkansas' authority to provide its own cost-sharing reduction payments for Arkansas Works plans. But to offset the premium increases resulting from Trump's decision, Arkansas reduced its cost-sharing payments.

Reflecting that decrease, Arkansas' average cost-sharing reduction payment to insurers fell in January by 26 percent, to $102.17.

The monthly cost of providing benefits, such as nonemergency medical transportation, to Arkansas Works enrollees fell by 7 percent to $3.91.

Some of the change from month to month in the program's cost stems from fluctuations in enrollment. Premium and cost-sharing amounts vary depending on the enrollee's age, choice of health plan, county of residence and whether the enrollee is a smoker.

First approved by Arkansas' Republican-controlled Legislature and then-Gov. Mike Beebe, a Democrat, the expansion of the state's Medicaid program extended coverage to adults with incomes of up to 138 percent of the poverty level.

This year, for instance, that income cutoff is $16,753 for an individual or $34,638 for a family of four.

The program faces a potential challenge during the fiscal session that starts Monday because the Legislature must approve funding for it as part of the appropriation for the state's Medicaid program for the fiscal year that starts July 1. Approval of such bills requires a three-fourths majority in the House and Senate.

Last year, the Medicaid appropriation bill for fiscal 2018 failed twice in the Senate and once in the House before passing both chambers.

To limit the cost to the state, Hutchinson, a Republican, has requested federal approval to move about 60,000 people off the program by limiting eligibility to people with incomes of up to 100 percent of the poverty level.

Hutchinson had hoped that change would take effect Jan. 1, but Davis said this week that gaining federal approval "may take a little more time."

Davis said the state does expect to receive approval soon for another requested change -- imposing a work requirement on many Arkansas Works enrollees. He said state officials will continue looking for ways to reduce the program's cost.

Under the Trump administration, "the ceiling's high on conservative reforms, and I think the legislators recognize that," Davis said.

A Section on 02/09/2018